PF Archive

Elections set to cloud better financing conditions in Russian oil and gas

03 11 2011

﻿Russia has a tempestuous record in accommodating foreign oil and gas investment, which makes the senior debt agree­ments for the Nord Stream 2 and Yuzhno-Russkoye projects, both closed this year, all the more impressive. Nord Stream, the second stage of the $8.8 billion twin 1,220km gas pipe-line running between Russia and Germany under the Baltic Sea was the first to close. Yuzhno-Russkoye  a Eu1.3 bil­lion ($1.2 billion) oil and gas field pro­ject to tap into reserves of around 833.5 billion cubic metres of gas  soon followed.
These two deals were particularly symbolic giving the concurrent high-profile collapse of a pro­pos­ed alliance bet­ween BP and state-owned company Rosneft. The partnership was plunged into disarray after disputes bet­ween BP and its fellow shareholder in the TNK-BP 50/50 joint venture, Alfa-Access-Renova, regard­ing what rights the company had over explor­a­tion rights in Russia. The dis­pute de­rail­ed the agree­ment with Ros­neft, which covered the East-Prinovoz­emel­sky field, and Rosneft sub­se­quently signed a new agreement for the field with ExxonMobil.
Vladimir Ryashin, a Moscow-based oil and gas adviser at Instock, believes the fallout from this was the biggest challenge of this year for the market. In spite of strong support for the Russian government the two com­pa­nies were not able to finalise the agree­ment, because of the protest of Russian shareholders of TNK-BP, he says.
Outside edge
The messy dispute over the Rosneft venture within TNK-BP, which recalled the 2008 dispute between the TNK shareholders, could have darkened the hopes of outside investors in Russia....

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